The StaRUG: what Germany’s preventive restructuring framework allows before insolvency filing is required

The StaRUG — Germany’s Unternehmensstabilisierungs- und -restrukturierungsgesetz, its stabilisation and restructuring act — opens a path to resolve a looming crisis before an insolvency filing ever becomes mandatory. It is built for companies that are still capable of acting but can see that, without countermeasures, they will foreseeably no longer be able to meet their payment obligations — the condition German law calls imminent insolvency.

This guide explains what the StaRUG actually provides, the four instruments the framework offers, why access is tied to imminent — not actual — insolvency, and what role the continuous crisis-monitoring duty under § 1 StaRUG plays in all of this. The groundwork for spotting a crisis early is covered in the guide to cash flow forecasting.

Legal note: This article explains the underlying business mechanics and sets out the broad statutory framework of the StaRUG under German law. It is not legal advice and does not replace it. Whether imminent insolvency applies in a specific case, and which instrument of the framework fits, is a legal assessment — bring in a law firm specialising in German restructuring law, or a restructuring advisor, early. This is specifically a feature of German law; preventive restructuring frameworks differ by jurisdiction.

What the StaRUG is — and who it is for

Under § 29 (1) StaRUG, the stabilisation and restructuring framework exists to durably resolve imminent insolvency within the meaning of § 18 (2) InsO. For that purpose, the law provides court-assisted procedural tools — the statute itself calls them “instruments” — that a company can draw on as needed, without going through formal insolvency proceedings.

The underlying logic is straightforward: a company that recognises its payment difficulties early has more room to manoeuvre than one that only reacts once actual insolvency has set in. The StaRUG translates that logic into its own body of procedural law — with court involvement, but outside Germany’s insolvency code.

The four instruments of the framework

§ 29 (2) StaRUG lists the instruments of the stabilisation and restructuring framework exhaustively:

• The court-run plan vote. A court-administered procedure for voting on the restructuring plan.
• The pre-review. A court pre-review of questions that are material to confirming the restructuring plan — resolving contested points before the final decision on the plan.
• Stabilisation. A court order restricting individual creditors from enforcing their claims on their own — so a single creditor cannot derail the restructuring through isolated action while the plan is still being negotiated.
• Plan confirmation. Court confirmation of a restructuring plan that the company and the participating creditors have already agreed on.

A company does not have to use all four instruments. Depending on the complexity of the case — how many creditors are involved, how contested the valuation is, whether an individual creditor is applying pressure — the plan vote alone is sometimes enough; in other cases, stabilisation is also needed just to negotiate the plan without interference.

The entry test: imminent, not actual, insolvency

Under § 29 (1) StaRUG, the framework is explicitly tied to imminent insolvency within the meaning of § 18 (2) InsO — the state where a company will probably be unable to meet its existing payment obligations as they fall due. How that condition differs from actual insolvency (§ 17 InsO) and over-indebtedness (§ 19 InsO) is covered in detail in the guide to imminent insolvency, including the forecast period of, in most cases, 24 months that § 18 (2) InsO applies.

That makes timing the decisive variable: a company that only recognises imminent insolvency once actual insolvency has effectively already occurred has missed the window to use the StaRUG framework preventively — and instead faces the duty to file and the liability risk under §§ 15a and 15b InsO that apply once insolvency has actually occurred.

Crisis monitoring under § 1 StaRUG

Independently of any specific restructuring proceeding, the StaRUG contains its own, permanent duty: under § 1 (1) StaRUG, the managing directors of a legal entity continuously monitor developments that could threaten the company’s survival. If they identify such developments, they take suitable countermeasures and report to the supervisory body without delay; where the measures touch the responsibilities of other bodies, they act without delay to bring those bodies in.

This duty applies whether or not a company is currently going through a crisis — it is the reason a management team is in a position to recognise imminent insolvency in time at all, and so to preserve early access to the restructuring framework. The statute itself does not specify a sanction for breaching this monitoring duty; that does not make it a formality, though, because without an ongoing view of solvency, the decisive moment — the shift from “not yet imminent” to “already imminent” — is hard to pin down with any confidence.

StaRUG vs. formal insolvency proceedings

The StaRUG is not an insolvency proceeding — it operates outside Germany’s insolvency code and, unlike an insolvency filing, does not require that actual insolvency or over-indebtedness has already occurred. Court involvement is graduated: from a simple plan-vote procedure up to a stabilisation order against individual creditors, a company draws on only as much court assistance as the specific case requires — unlike formal insolvency proceedings, which as a collective procedure bind all creditors alike.

For management, that means the framework offers more room to shape the outcome, but it does not replace the ongoing monitoring of the company’s own solvency — on the contrary, without that monitoring, there is no way to even identify the right moment to use the framework.

Getting there in practice: from the numbers to a restructuring plan

Before a restructuring plan can even be negotiated, a company needs a defensible numbers base: a current 13-week cash flow forecast for the short-term view and a 13-month plan to cover the full forecast period that imminent insolvency is assessed against. Together, the two show whether and from when solvency tips — exactly the question § 18 InsO poses as the entry test for the StaRUG.

To get a first, one-off read on that numbers base, the free 13-week forecast generator is a fast way to start: two CSV exports of open receivables and payables plus the current bank balance are enough to see the low point of the next 13 weeks. For the ongoing, rolling update that § 1 StaRUG in substance requires, a company instead needs a solution that keeps the numbers current automatically, rather than maintaining them by hand every week.

If the forecast shows solvency tipping within the planning horizon, legal and restructuring advice is the next step — to assess whether the conditions for the StaRUG framework are met and which of the four instruments fits the case. If the position instead hardens into actual insolvency, the duty to file and the liability risk covered in detail in the guide to GmbH insolvency in Germany apply from that point on.

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